New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

HABITAT

Subscribe for Daily Updates!
Condo Renting versus ownershipAug 18, 2014

We are a condo of 67 units. Lately buyers seem to be investors and renting out the unit. We have nothing that addresses this situation in our bylaws. We now have 10 of the units rented with no restrictions on time of lease etc. I understand that if 30% of units are rented some banks will not approve a mortgage. I do see other pitfalls and the board is discussing solutions. First we are trying to get an 80% majority vote changed to 66-2/3rds in our bylaws. The more rentals with absentee occupancy the more problems we seem to have. What are your thoughts and has anyone confronted this same problem? This will be a hard sell.

Join the Conversation Comments (2)
Renting / Ownership - Mark B. Levine, RAM (Excel Bradshaw Management Group) Aug 18, 2014

Banks tend to not want to lend towards buildings that are greater than 15% of investor-owned or subleased. This is because they fear that if the tenants don't pay their rent then the unit owner(s) may have an issue paying the common charges as they were relying on that income to pay for their monthly fees.

The sooner you can get your bylaws amended by the 80% that is called for in the document to reflect the change in the sublet policy, the better off you will be. If you wait too long and greater than 20% of your units are rented out, it is more likely that you would never be able to capture the 80% approval vote as you need.

If you'd also like to make it less onerous on the owners, you can institute a sublet cap in years (no more than 3 out of every 5 years) or 3 years total, etc. You can also make it a soft-income revenue builder by charging a sublet fee to all unit owners who do choose to rent.

If your Offering Plan holds a provision for a Right of First Refusal for sales and sublets prior to their implementation, that is one tool that you have to manage the sublets as well.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (4)
Rentals - dsi1 Aug 19, 2014

You can also institute a bylaws change of policy that no rentals or subletting are allowed during the first 3 years (or 5 years) of ownership to make it financially undesirable to purchase for investment vs. domicile/residential ownership

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (1)
Condo renter policies - Elisa Sep 01, 2014

All these are good suggestions, but they seem to be more "co-op" based than condo based. People buying into condos often assume that there are far fewer rules than in a co-op, and that they can rent out their unit for as many years as they want. There is also no "proprietary lease" in condos. How exactly can condos create, implement and enforce these rules on limitations on owner rental? In what document would such rules reside? Also, how enforceable are they? In a co-op, boards can always threaten to revoke the proprietary lease if its strictures are violated; what power do condos have in similar situations?

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (1)
condo renter policies - Ross Weinstein Condo and Coop Lending Executive Sep 01, 2014

Hi Elisa

As a condo you do have and must abide by the 1.Rules and Regulations
2.Condo Declaration
3.ByLaws

Would need to review and see the language contained with regard to leasing of ones unit.
By Laws can be ammended usually with a 2/3 or 3/4 vote.
The penalties for not complying with bylaws or any of condo regulations can be also spelled out to the degree on severity desired.
Again a clear and concise discussion and presentation of all the negative ramfications should get enough support to pass.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (1)
Condo Rental Rules - CondoGuy1 Feb 12, 2015

My Condo in its 1979 offering plan clearly states that owners can sell or rent their unit to whoever they want. The condo does not require right of first refusal.

We don't approve tenants, or owners. Honestly between folks using it as weekend places, pied a tiers, primary homes, second homes, units in LLCs, and renting it out. And some rent it year round vs seasonal leases. We have snow birds who go to Florida and rent for winter. Leases of one month or greater is legal.

I dont know how we would even attempt to regulate this. Also in a 36 old condo with a few original owners hard to imaging enforcing the rules. Sounds good on paper, but 36 years in it is hard.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
Renters in a Condo Association Environment - SrPropMgr Aug 24, 2014

Besides the issue of renters not paying their rent on time I am seeing an issue with renters having a total disregard for house rules and recycling policies. This puts a burden on the Super, the Property Manager, and the Board.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
Renters in a Condo Association Environment - SrPropMgr Aug 24, 2014

Besides the issue of renters not paying their rent on time I am seeing an issue with renters having a total disregard for house rules and recycling policies. This puts a burden on the Super, the Property Manager, and the Board.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (1)
Nonpayment, Disregarding Rules - Dax Aug 26, 2014

Although this is a bit off-topic, when the percentage of unpaid rents and occupancy charges is climbing while rules are being ignored the board should be examining its management style and policies. Substantial overdue rent coupled with widespread rule violations are often suggestive of a breakdown in one or more basic elements of operational management.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
unsold shares, sponsors refusing to sell and to relinquish control - Rhona Feb 13, 2015

I think it may be very good that shareholders, board members, managing agents, and attorneys chime in on this serious topic. The attorney general should keep their ears and eyes open and glued to these conversations as well. Let's keep them coming, because they will come in very very handy. If you can make a list of how you feel that your investment, your home, your co op has been harmed because the sponsor(s) refuse to sell, it would be very helpful.

Rhona

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
Condo renting versus ownership - Ross Weinstein Condo and Coop Lending Executive Aug 31, 2014

While there are a handfull of options for finance for residents in high investor concentration projects... for several reasons most lenders will not approve.

The associated industry term is "unwarrantable" for a building that doesnt meet standards which today are industry wide.

There are quite a few ramifications, including direct impact to value and marketability. Some of the other concerns are not as obvious but just as important to present to the ownership. Definately seek the advice of a source familair with the intricacies associated with your building and the mortgage landscape today on a plan and ongoing review of compliance.

Many buildings have implemented strict requirements and tighter guidelines for investor owned vs owner occupied units. This scrutiny also applies to those who may now decide they want to rent their unit.

Most mortgagee and lender documents include verbiage requiring owner occupancy and in the event of a change they must be notified and the request to rent can be denied.

Making changes that bring and maintain a project to the standards and requirements of the mortgage environment we face today is a non negotiable and long overdue for those yet to make them.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation

Introduce yourself to other members of Board Talk! Log in below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Introduce yourself to other members of Board Talk! Login below or register here.
Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Ask the Experts

learn more

Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments

Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise

Source Guide

see the guide

Looking for a vendor?